Middletown heading for fiscal cliff, state auditor warns

Wow.  Cox Media through the Dayton Daily News and the Journal News just love to pick on Middletown.   The story above was in the Journal and on their web page today:

http://www.journal-news.com/news/middletown-heading-for-fiscal-cliff-state-auditor-warns/WnARN9TjMBlWIOtyLy5MIL/

Below is the email we received from the Journal, the questions asked, and my answers in bold italic print.  It’s nothing short of astonishing that none of it ended up in the article today.   Don’t you dare believe everything you read in the paper….

From: Rutledge, Mike (CMG-Dayton) [mailto:Mike.Rutledge@coxinc.com]

Sent: Wednesday, January 25, 2017 3:04 PM To: Adkins, Doug <douga@cityofmiddletown.org>; Mulligan Jr, Larry <larrym@cityofmiddletown.org>; Bronston, Dora <dorab@cityofmiddletown.org>; Picard, Dan <danp@cityofmiddletown.org>; Moon, Talbott <talm@cityofmiddletown.org>; Bohannon, Steve <stevebo@cityofmiddletown.org>

Subject: Seeking reaction to Ohio Auditor David Yost that Middletown is showing signs of fiscal stress

Doug and members of City Council:

I’m seeking your reaction to this report from Ohio Auditor Dave Yost, who says Middletown is showing signs of elevated fiscal stress, indicating the possibility of financial trouble, especially if there is a recession, as the governor has predicted.

The following report, written by a Dayton Daily News reporter, already is posted online.

I’m wondering what you think of Dave Yost’s report.

The Auditor built this report based on data from 2015 and only from data without a working understanding of the goals, projects and flexibility each city has in its longer range plans.  The data represents a 2 year old data snapshot, not a working knowledge of ongoing operations.

I’m also wondering whether Yost’s office gave you a heads-up about this announcement and forwarded you the report.

Do you agree with his assessment? How concerned should city residents be about this situation? Anything else you’d like to say about this?

The report lacks the ability to place context in the data presented.  The City of Middletown has been completing extensive capital projects and has undertaken a number of deferred maintenance projects during the past two years that weren’t completed during the recession.  Our drawdown on reserves is by design and with a flexibility and understanding of which projects and staffing can and cannot be quickly changed in the event of a downturn in the economy.  We monitor revenues and expenses on an ongoing basis (and online on our web page for transparency), so any downturn would be seen in no more than 30 days.  We are simply not seeing a downturn in Middletown.  Quite the opposite.

In 2016, income tax revenues were up in Middletown by over $700,000.   To put that in context, at a 1.75% income tax rate, that $700,000 in new tax revenue represents $40,000,000 in new payroll dollars over 2015.  We are adding new housing stock, new businesses and have several hundred manufacturing and health care positions that are open and available at this time.  We are hardly in a downturn.  There is currently over $750 million in new construction underway in Middletown.   The 2017 budget has over $12 million in new capital infrastructure projects.  

Several of the Auditor’s cautionary outlooks are monetary policy that was executed by the city after careful consideration and by design.  We are investing in infrastructure needed by our manufacturers to expand their businesses.  We have been involved with the land bank on a grant demolition program that reimburses after demolition.  We are, therefore, using general fund dollars for demolition but have not received the reimbursement.   We’ve opened 32 new downtown businesses in the past two  years and three new anchors at our mall.  AK Steel is just completing a new $36 million Research and Innovation Center on our east end.

This was all accomplished despite the discontinuation of the inheritance tax which cost the city of Middletown about $800,000 per year in lost revenue, and with a steep reduction in the local government fund, leaving the city with an additional $900,000 less operating revenue annually than we had in 2010.

2015 is old news and this report is out of context with the current reality.  We all know that at some point we will see another recession.  We have the ability to curtail spending at any time as the economy and our revenues dictate.   We are not in financial distress and if the Auditor truly stated that we are on the highway to deep trouble, then I sure hope we stay on this current road as long as possible.   I’m not sure how we could be improving in all sectors much faster than we are right now.

Is Middletown doing anything in light of this report to stabilize its finances?  See above.

FYI, I have requested a copy of the report but do not yet have it.

Seeking your response ASAP, as the article already is posted online.

Thanks very much.

All the best,

Mike

2 thoughts on “Middletown heading for fiscal cliff, state auditor warns

    • It’s unfortunate to me that some in the media just want to take digs at Middletown. That story could have been a balanced story talking about the difficulties cities like Middletown face coming out of the recession and the work still to be done to shore up infrastructure and deal with issues like health care costs. It could have stated the concerns and also the successes since 2015 and the steps being taken to address the challenges since that data was produced in 2015. We are not all roses here, but to say we’re getting weaker is just silly.

      Like

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